JGBS: Futures Hold Negative Bias As We Approach BoJ Announcement Window
JGB futures are holding a negative bias, last 135.89, -.24 versus settlement levels. Oct 8 lows at 135.61 remain a downside focus point. US Tsy futures are maintaining a negative bias, although 10yr futures have broken to fresh lows (last 112-26+). Cash JGB yields are mostly firmer, as markets play catch up, with the belly of the curve leading (2bps higher). Focus will be on the BoJ meeting outcome later.
- The 10yr cash JGB yield is back around 1.68%, recent cycle highs rest just above 1.70%. The 5yr yield is close to 1.25%, which is fresh highs in the benchmark back to 2008.
- 20-30yr tenors are showing steadier trends (while the 40yr is drifting lowe rin yield terms). The 30-yr last under 3.06%. This leaves the 2/30s curve little changed at +211bps. The 2/10s curve is steeper at +73bps, up from recent lows around +70bps.
- We are coming up to the lunchtime break for JGB futures (just after 11am local, currently 10:55am). This puts us into the BoJ release window.
- Note the last policy decision from the central bank came out at 12:47pm local time, which was a little later than normal. We did have 2 dissenting votes (who looked to raised rates), while it also announced plans for its ETF holdings in relation to the balance sheet. As usual, the longer the decision takes to arrive the greater the risk potential policy adjustments are being debated.
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